by: Adreana Young
The search for a solution to generating revenue online has taken publishers and readers behind paywalls—from free and open websites to different payment plans—but the key to retaining and gaining audiences and paid subscribers might not be how readers are getting their news, but, a more obvious answer is what they are getting out of it: the value of the content.
With so much information out there, the real selling point for newspapers should be the quality of the content and the sense of community readers can achieve by subscribing.
The ups and downs
In 1997, the Wall Street Journal launched the first national newspaper paywall, charging $50 a year for a WSJ.com subscription. Since then, the Journal has been able to keep their paywall in place. However, not every newspaper (national, regional or local) has been able to say the same.
After implementing TimesSelect in 2005, a program that charged customers $49.95 a year for online access to columns and to the paper’s archives, the New York Times removed the paywall and stopped charging customers for online use only two years later.
According to reports, the Times said they nixed TimesSelect because the paper’s paid subscriber base was low compared to the growth of their online advertising. However, the Times isn’t alone. Other newspapers have been experimenting with hard and metered paywalls as well.
The Dallas Morning News first established their hard paywall in 2011 after some hesitation, only to later change the paywall’s model to a soft (or metered) paywall in 2013.
So why do digital paywalls work for some newspapers and not others? What is it about the Journal that has allowed them to maintain their paywall?
Suzi Watford, chief marketing officer of Dow Jones, said it’s about content that’s worth paying for.
“I think the investment in quality journalism, the scoops, the stories, the experience around the product, all of that is worth paying for…For us when we think about subscription we think about the value of the overall bundle. So, at the heart of that is the content…and how people read it,” she said. “It’s about experience of the subscription, the people that are in that community sharing the same kind of ambitions.”
Four years after the Times removed its TimesSelect program, the newspaper resurrected another paywall in 2011. This time the paper implemented a soft subscription model for their entire website, allowing readers up to 20 articles per month until being prompted to pay for a subscription (that number later changed to 10 articles per month in 2012).
This model has been more successful for the Times and other newspapers alike.
According to an International News Media Association study published in November 2014, 45 global newspaper companies polled—ranging from local newspapers to metro dailies— found that metered paywalls are more successful than hard paywalls in terms of retention rates among readers. Newspapers using a metered paywall reported retention rates of an average of 58.5 percent compared to newspapers using a hard paywall reporting only 15 to 20 percent retention rates.
However, the level of success and what works best might be different depending on the newspaper’s size, audience and even location. How can smaller, local newspapers compete in the industry market?
Rob Mitchell, editor and online manager for the Rutland Herald in Vermont, mirrored Watford’s thoughts: the key to getting readers to come back and pay for a subscription is the relationship between the reader the newspaper and the value of the content provided.
“If people don’t perceive the value, and people don’t value the habit, they won’t pay for it,” he said.
The Herald implemented their hard paywall in October 2010 and has since seen a rise in retention. Yet, it wasn’t always that way. Mitchell said within the first three months of implementing the paywall, the paper received some backlash from readers, and online page views dropped by 45 percent.
“People were calling and emailing, saying we were idiots, and worse, that they would never pay a cent,” he said.
However, some readers were in favor of the paywall, calling it a smart business move. Mitchell said page views now have since increased to about 95 percent pre-paywall with 46,500 online subscribers, almost three times their paid print circulation.
“If you’re not investing in the newsroom, and not creating compelling stories, following things that no one else can or will, people just won’t pay for it,” said Mitchell. ”So I think the paywall is not the end—it’s a means to support quality journalism, and quality journalism is what will make a paywall a success.”
Not only has the business model evolved over the last few years, but the name and definition of a “paywall” has shifted.
At the Journal, Watford said, “It’s a term that has become an industry norm no doubt so it’s an easy shortcut to differentiate between free and paid, but we prefer to think about subscription and membership. Paywall sounds transactional, which it is, but it would be a mistake to think that's where it ends as it’s the start of the customer experience and journey.”
Mitchell said the Herald has “steered away from it, mostly because almost any layperson has no idea what a paywall is. So, internally we refer to it as a paywall, and when we’re talking to colleagues, but externally, we generally say ‘paid online content’ or ‘online subscriptions’ or ‘digital subscriptions.’ There is also a somewhat negative connotation to the word ‘wall,’ and that probably has something to do with it. But really the reason is that our community, by and large, doesn’t know what a ‘paywall’ is. They do, however, understand without explanation ‘online subscription.’”
It pays to be a member
It isn’t only the paywall that pays off. Creating a sense of community takes more than simply building a wall around the readers. Membership programs—offering members discount, tickets, special events, and more content or access to archives—has added to the value Mitchell described as so critical to readership retention.
“The last five years’ experience has made us humble enough to go seek new ways to be part of our communities. That’s really what we do, create a community connected by geography, and I think advertisers and readers will pay for that in some way,” he said.
Last September, the Wall Street Journal launched WSJ+, a free addition to subscribers offering discounts and tickets; but more, the new membership program offers readers the chance to meet reporters, visit the newsroom and attend exclusive events—all in the name of community.
“I think people have always had relationships with their newspapers. People have been used to writing into newspapers or going to them for what to do or where to eat…so I really think it makes sense for newspapers to do these kinds of things,” Watford said about the new membership program. “People read their newspaper in order to get inspiration…The ability of the Journal to either get access to exclusive events, behind the scenes, people are fascinated about how the paper works and seeing journalists in action, all that stuff just builds on the fact that people have a deep relationship with their newspaper. It’s what you love coming to life, and we’re giving you more than that.”
The program promotes a dialogue with readers, opening up the Journal newsroom for tours and for a chance to meet the reporters and editors, creating deeper relationship and a sense of community with the newspaper.
“You have to go deeper into content and making it a live experience. It’s the fact that we can get access to these events or brilliant offers, and then it’s that connection between the readers and the writers, but also the readers and the other readers, and I think if you’re a Journal subscriber, you’ve probably got a lot in common in terms of what you want to talk about with another Journal subscriber,” said Watford.
With 712,000 digital subscribers and nearly 2.2 million total subscribers, the Journal promotes their new membership program in their digital and print products, but also sends out a weekly email highlighting what’s new in the programs, Watford said.
Although the program is less than a year old, she said the events program has really taken off in New York, where the newspaper is published. They include a couple of events each week ranging from newsroom tours, Internet get-togethers with reporters, and access to local galleries and restaurants.
“It is a big program and it’s growing rapidly. The challenge for us is to make enough events for the demand,” Watford said. “We’re trying to keep us with the demand because we’d like to meet with subscribers across the country, not just in New York.”
And the paper is already on top of that mission. In February, the Journal became the first newspaper to roll out their membership program on a global scale, launching in places like Hong Kong and London.
Looking ahead
Still, with so much buzz around membership programs and paywalls, there are other ways the industry has been experimenting with payment and subscription methods in order to garner more revenue.
Micropayments (purchasing an individual article for a lesser price rather than paying for a monthly or annual subscription) are beginning to make their way into the forefront of the conversation.
News organizations such as the New York Times, the Wall Street Journal and the Washington Post have plans to work with Blendle, a Dutch company offering readers the micropayment option for their news consumption.
Mike Gehl, president of iMoneza (imoneza.com), a technology company with payment gateway software offering newspaper the ability to implement micropayments, compares micropayments for newspapers to iTunes song purchases, and how the ability to purchase one song rather than an entire album revolutionized the music industry.
He believes something similar could happen with newspapers because micropayments cater to what people actually want.
“The younger generation, millennials in particular, want choices and this means paying for things they read and not paying for the things they don’t read. Many people are just too busy to read most of a newspaper on a daily basis and their interests too varied to choose just one or two magazines to read,” Gehl said.
While it may seem as though this type of payment doesn’t exactly build a relationship between newspapers and readers, Gehl said it’s still about the value.
“If the content is valuable enough, people will pay for it,” he said. “To sustain growth, newspapers need better more unique stories and better more unique information. This means that editorial has to spend more time per story, which is the opposite of what is happening. Editorial is trimming staff and reducing time spent per article in order to cut cost. The problem is short stories with little to no information are not worth reading or paying for. And what little information in these stories can easily be found elsewhere on the Internet.”
Gehl believes successful paywalls are only part of the solution for newspapers, but that giving readers flexibility to only pay for what they want is important as well. In addition, micropayments might also result in full-time subscribers.
“The subscription price should be based off the price of individual articles, not the other way around. (It) should be low enough, so the readers feel like they are getting a deal for purchasing all content in bulk,” he explained. “Why do I shop at Costco? Because I feel like I’m getting a deal. The bulk package price is better than the smaller package price. This circles back to the need for micropayments. Publishers who charge subscriptions for their content is like forcing people to shop at Costco. For some people it works to shop at Costco, but others just don’t need that much mayonnaise.”
While there may be no one-size-fits all solution to generating online revenue for newspapers, a few common threads become clear. Weaving through large, national and international newspapers like the Wall Street Journal to smaller, local papers like the Rutland Herald, finding a winning strategy comes from investing in quality journalism and building a strong relationship and community with the readers.
A Brief History of Paywalls
January 1997
The Wall Street Journal launches the first national newspaper paywall, charging $50 per year.
August 2003
The Los Angeles Times begins charging readers $4.95 a month for online access to its entertainment section.
May 2005
The L.A. Times drops its paywall after a reported 97 percent drop in readership of affected content.
September 2005
The New York Times introduces TimesSelect, charging a $50-annual-fee paywall.
October 2007
The Financial Times, which began charging for content in 2001, is the first to adopt a “metered model” paywall.
September 2007
The New York Times drops TimesSelect.
October 2009
Newsday introduces a paywall charging $5 a week or $260 a year.
January 2011
The New York Times resurrects its paywall, this time implementing a metered paywall for all online content.
July 2012
The Augusta (Ga.) Chronicle drops their print-only subscriptions and announces there will no longer be a surcharge for access to digital platforms.
August 2013
The Toronto Star launches a digital paywall, charging digital-only subscribers just under $5 per month.
March 2015
The Albany (N.Y.) Times Union launches a paywall subscriber program.
March 2015
Cox Media Group changes its hard paywall to a metered paywall for its four newspaper sites.
April 2015
The Toronto Star drops its digital paywall.
April 2015
The Winnipeg Free Press launches a new paywall allowing readers to pay for individual articles, charging readers 21 cents for every article or $13.47 per month for a subscription.
Sources: The Week, Newspaper Association of America, NetNewsCheck, Poynter
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